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Arnie McKinnis | August 26, 2016

How to Calculate Total Cost of Service Delivery of an ITSM Solution

Welcome back to the series – 10 Must Ask Questions When Buying (or re-signing) a Service Management Solution. If you missed previous posts, catch up with the links below.


Question #8: Can it help control and reduce service delivery costs?

Any technology used by your organization, specifically the tools used to manage and operate IT, ultimately need to help reduce costs. For many, this is the overriding decision when making a purchase—understanding the total cost and the return on investment. Your service management solution is no different.

That being said, your IT organization is the central point in creating, developing, maintaining, and delivering technology-enabled services—whether it be to your workforce, your customers, or both. As such, there is a necessity to move beyond thinking solely in terms of “total cost of ownership” and start focusing on the “total cost of service delivery.”

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Best practices for calculating true service delivery costs

Total Cost of Ownership is an easier calculation, requiring only the facts based upon the overall spend, contract length, implementation costs, training, etc. Getting to the Total Cost of Service Delivery requires more thought and analysis. It extends beyond the criteria used for calculating TCO by including the overall impact to both your IT organization, your users, and the various departments using extended features and functions.

To complicate Total Cost of Service Delivery calculations, many service management vendors offer a solution with an appealing initial price, only to tack on additional fees over time. It is vital to investigate beyond the initial price, or current functionality, and look at what has happened to other customers when the initial contract ends. It’s also important to understand how key features, provided free or at a reduced price initially, will be treated once that introductory period has ended.

Your service management solution is an indispensable tool for creating integrated and seamless IT services. Service integration is a fundamental component in the development of those services. Tracking the full lifecycle of an individual service, with its associated delivery costs, becomes the foundational element. Once added together, we have a full view of IT’s total cost of delivery. But, if the cost associated with this primary tool fluctuates over time, it creates less predictability and limits your ability to understand and more importantly, manage the Total Cost of Service Delivery.

Overall cost control and reduction

Once we consider the cost to deliver a service, we begin working through more than just the cost to acquire, integrate, and support services—we begin to look at service volume, vendor management, ease of function, and data integration. To effectively manage technology, your IT organization needs to understand and predict technology costs. This moves from budget analysis and budget line items to managing the full services lifecycle, including integration costs between services.

Your service management solution should help control and reduce the overall cost of service delivery. Important areas to consider include:

  • Resources required (including time) to deploy the service management solution itself
  • Ease of use to create new services or service based applications
  • Self-service capabilities for your users, regardless of the device used
  • Ability to uncover rogue or shadow applications within your environment

The Total Cost of Service Delivery is an important metric as you move from managing technology, to managing integrated services. It’s imperative to understand which services are being maximized and which are not. The cost of Shadow IT to your organization is increasing every day, with hundreds of unauthorized applications being used to conduct business, without support or adhering to corporate security guidelines.

Total cost of service delivery

With EasyVista, companies can drive down the cost of service delivery while tightening controls to prevent costly service surprises. EasyVista helps reduce costs by accelerating deployment from months to weeks through codeless application development, requiring less IT resources and outside professional services. EasyVista also helps reduce the cost of Shadow IT, including unauthorized or rogue subscriptions to cloud-based apps.

EasyVista provides straightforward, no-surprise pricing which doesn’t penalize customers as they scale and expand their service offering.

Over time, EasyVista delivers efficiency and visibility for additional value to the enterprise by increasing end user productivity through faster service resolutions, less time developing/deploying services, and by exposing opportunities for organizational improvements.

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Catch up on this full series: 10 Must Ask Questions When Buying (or re-signing) a Service Management Solution

Post 1 – Overview
Post 2 – Closing the Gap Between User Expectations and IT Service Realities
Post 3 – The Emerging Mobility Challenge: Supporting User Productivity in a BYOD World
Post 4 – Services Must be Easy to Deliver to Achieve Service Management Success
Post 5 – Delivering Rapid Business Value with Easy Codeless Service Design
Post 6 – Driving Business Innovation with Service Management
Post 7 – Why Mobile-first Matters in a Service Management Solution
Post 8 – Select Seamless Integration Capabilities for First-rate Service Delivery
Post 9 – How to Calculate Total Cost of Service Delivery of an ITSM Solution
Post 10 – 5 Things That Prove a Service Management Vendor is Invested in Your Success 
Post 11  Best Practices for Forming a Successful Partnership with a Service Management Vendor

 

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Arnie McKinnis

Arnie McKinnis is an industry insider with 30+ years experience in the high tech space. For the past decade, Arnie has helped develop and launch “as a Service" cloud, Service Management, and Service Integration technology products, delivering true value in the marketplace.